Economy

FTA will negatively affect 1.8 million farmers in Colombia: Report

On the eve of the start of the Colombia – U.S. Free Trade Agreement (FTA), the charity Oxfam said Monday the deal will bankrupt small farmers and increase poverty in rural Colombia.

“A significant number of small farm households would see substantial drops in their income as a result of the FTA,” the organization claimed in a report presented at a press conference Monday. “This would result in a deeper vulnerability for a population that has already been disproportionately affected by Colombia’s internal conflict.”

Oxfam’s report, presented in conjunction with human rights groups Planeta Paz and the U.S. Office on Colombia, said Colombia’s 1.8 million farmers will see their income drop by 16% as a result of the FTA, which takes effect Tuesday.

In an analysis of the small farm economy in Colombia, the report’s authors examined expected changes in domestic prices and what those changes could mean for the size and production levels of small farms.

According to the report, the deal with Colombia’s leading trade partner will hit the poorest farmers the hardest, arguing that 400,000 of those already making below minimum wage, currently set at $328.08 a month, will lose between 48% to 70% of their income.

To make up for the loss, the report said that farmers are “likely to take up coca cultivation” for illegal armed groups. The other option for farmers will be to “migrate to urban areas to join some 5 million Colombians – over 10 percent of Colombia’s total population – who have been forcibly displaced from the countryside over the last 12 years and the great majority of whom live in extreme poverty,” it claimed.

The Colombian government has denied that the FTA will harm key agricultural sectors.

“I do not personally believe, nor does the government believe that an apocalyptic shadow is rising over the Colombian countryside, agriculture and livestock industries that will wipe out everything that has been built in the country,” the Agriculture Minister, Juan Camilo Restrepo has said.

The FTA will eliminate tariffs on more than 70% of Colombia’s agricultural exports to the U.S. immediately, while all remaining tariffs will end within 19 years. Duties on some of the more crucial exports, including rice and chicken, will be phased out over that time.

On Tuesday tariffs will end on 80% of American exports of consumer and industrial products.

Oxfam branded the agricultural negotiations of the deal “unfair,” criticizing the fact that sugar – a major Colombian export — has been excluded from the tariff-dropping program all together.

It also argued the deal leaves Colombian farmers competing against heavily-subsidized American products.

“For practically all activities that compete with imports, the net income or profit would decrease to zero,” the report argued.

That would be true for rice, barley, beans, maize, sorghum, wheat, chicken, and pork – products which would all become more expensive to produce than to sell.

“The future of the country’s agricultural sector will necessarily depend on the implementation of a reform and modernization program, consistent and enduring over time,” the report noted.

Favored trade treatment with the U.S. and the eventual elimination of all tariffs will leave Colombia with its hands tied for trade negotiations with other nations, Oxfam also alleged.

“This takes away an enormous amount of flexibility from Colombia in future trade negotiations,” the report said. “It impedes the country from granting preferential access to other countries for products in which Colombia has a comparative advantage, in exchange for favorable treatment in products of interest to Colombia.”

Oxfam has been an outspoken critic of the FTA. On the signing of the agreement in October 2011, the organization called the deal “a step backward for development and poverty reduction in Colombia.”